The percentage of income earned by poor and rich in the US.
Answer to Problem 1CQQ
Option 'b' is correct.
Explanation of Solution
Option (b):
Poverty line is the line that determines the minimum income required to meet the basic requirements of a quality life by the people. The household with family income less than the poverty line is said to be poor and those who earn very much above the poverty line are considered to be rich by the government. According to the available data about the US economy, the income distribution is very unequal. About the poorest, one-fifth of the total population earns about 4 percent of the income of the economy, whereas the top one-fifth of the rich population earns about 50 percent of the US total economy income today according to the sources.
From the reliable sources, it is obtained that about 4 percent of the total income is earned by the poorest fifth of the population and about 50 percent of the total income is earned by the richest fifth of the population. Since option 'b' gives the values equal to the obtained value, option 'b' is correct.
Option (a):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. Since the option explains that the richest fifth of the economy earns 70 percent and the poorest fifth earns 2 percent which are incorrect to the obtained values, option 'a' incorrect.
Option (c):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. Since the option explains that the richest fifth of the economy earns 35 percent and the poorest fifth earns 6 percent which are incorrect to the obtained values, option 'c' is incorrect.
Option (d):
The data sources reveal that about 4 percent of the income of the US economy is earned by the poorest fifth of the economy, while 50 percent by the richest fifth. This means that there is a high level of inequality in the distribution of income that exists in the economy. Since the option explains that the richest fifth of the economy earns 25 percent and the poorest fifth earns 8 percent which denotes lower levels of inequality in income distribution, they are incorrect to the obtained values, and thus option 'd' is incorrect.
Concept introduction:
Income inequality: Income inequality represents the unequal distribution of household or individual income among various economic participants of the society.
Want to see more full solutions like this?
Chapter 20 Solutions
Bundle: Principles of Economics, 8th + MindTap Economics, 1 term (6 months) Printed Access Card
- Not use ai pleasearrow_forwardNot use ai pleasearrow_forwardThe Firm's Output Decision (Study Plan 12.2) Use the following table to work Problems 4 to 6. Pat's Pizza Kitchen is a price taker. Its costs are Output (pizzas per hour) Total cost (dollars per hour) 0 10 1 21 2 30 3 41 4 54 5 69 4. Calculate Pat's profit-maximizing output and economic profit if the market price is (i) $14 a pizza. (ii) $12 a pizza. (iii) $10 a pizza. 5. What is Pat's shutdown point and what is Pat's economic profit if it shuts down temporarily? 6. Derive Pat's supply curve.arrow_forward
- Use the following table to work Problems 27 and 28. ProPainters hires students at $250 a week to paint houses. It leases equipment at $500 a week. The table sets out its total product schedule. Labor (students) 1 Output (houses painted per week) 2 23 5 3 9 4 12 5 14 6 15 27. If ProPainters paints 12 houses a week, calculate its total cost, average total cost, and marginal cost. At what output is average total cost a minimum? 28. Explain why the gap between ProPainters' total cost and total variable cost is the same no matter how many houses are painted.arrow_forwardUse the following table to work Problems 17 to 20. The table shows the production function of Jackie's Canoe Rides. Labor Output (rides per day) (workers per day) Plant 1 Plant 2 Plant 3 Plant 4 10 20 40 55 65 20 40 60 75 85 30 65 75 90 100 40 75 85 100 110 Canoes 10 20 30 40 Jackie's pays $100 a day for each canoe it rents and $50 a day for each canoe operator it hires. 19. a. On Jackie's LRAC curve, what is the average cost of producing 40, 75, and 85 rides a week? b. What is Jackie's minimum efficient scale?arrow_forwardPlease solve this questions step by step handwritten solution and do not use ai thank youarrow_forward
- 1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically. 2. Consider the following table of long-run total costs for three different firms: Quantity Total Cost ($) Firm A Firm B Firm C 1 60 11 21 2 70 24 34 3 80 39 49 4 90 56 66 5 100 75 85 6 110 96 106 7 120 119 129 Does each of these firms experience economies of scale or diseconomies of scale? Explain your answer with necessary calculations.arrow_forwardRiaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer.State the condition for a consumer's utility maximizing choice and illustrate graphically.arrow_forward1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically.arrow_forward
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage Learning
Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
